To power their mining operations, Bitcoin miners either purchase electricity from conventional and renewable energy sources or develop and run their own renewable energy facilities, turning them into energy consumers.
Miners typically purchase electricity from energy providers, such as utility companies or independent power producers, to mine BTC. They then use that electricity to power their mining equipment. This can include both traditional energy sources, such as coal or natural gas, as well as renewable energy sources, such as solar or wind energy.
Hydro-Quebec, a Canadian utility company that sells electricity to Bitcoin miners, is a real-world example of how Bitcoin miners act as energy buyers. In order to take advantage of the low electricity prices in the province, the firm has been actively courting Bitcoin miners to establish operations there and utilize excess hydroelectric power to mine BTC.
In some circumstances, miners might also sign long-term agreements with energy suppliers, which could provide them access to a more reliable and consistent source of electricity. Large-scale miners can benefit the most from this, as it enables them to plan and budget for their energy requirements in advance.
By establishing and running their own renewable energy facilities, such as solar or wind farms, Bitcoin miners can also take on the role of energy users and function as energy purchasers. By doing this, they support the switch to sustainable energy sources as well as securing energy for their mining activities.
For instance, a Bitcoin miner called Genesis Mining has established operations in Iceland and is running them using geothermal and hydroelectric energy. This allows the miner to benefit from Iceland’s plentiful renewable energy resources and lessen its environmental impact. Additionally, one of the largest Bitcoin mining facilities in the world, KnCMiner, is powered by a wind farm that the company developed on its own land in Sweden.
To make use of extra energy that would otherwise be wasted, miners may also choose to locate their mining operations next to existing renewable energy facilities, such as hydroelectric dams or geothermal plants. For instance, the Bitcoin miner Greenidge Generation in upstate New York, U.S. generates electricity for its mining operations using extra natural gas from a local power plant. The company also constructed a 7-megawatt solar farm to help meet its energy requirements.